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Quest Means Business
Dow Closes Nearly 260 Points Higher; Intel Cuts Revenue Forecast as Businesses Slow to Buy New Computers; Alibaba Invests $200 Million in Snapchat; European Stocks Mostly Down; Greek PM Says Greece Will Meet Obligations; Deadly Factor Collapse in Bangladesh; Recurring Tragedies in Bangladesh; China Industrial Growth Slows Sharply; Children Left Behind in China; NASA Studies Dust Movement Across Continents; Make, Create, Innovate: Mapping the Earth Through Satellite Imaging; Two Ferguson Police Shot
Aired March 12, 2015 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: A blockbuster day on Wall Street. The Dow rises over 250 points. It's Thursday, March the 12th.
It's what they call the rise and fall. What's behind the market volatility.
The chips are down. Intel says demand for PCs is in decline.
And Disney's double-whammy. Star Wars VIII and Frozen II are both coming soon.
I'm Maggie Lake, and this is QUEST MEANS BUSINESS.
Good evening. Tonight, bad news for the US economy is good news for the Dow. The Dow skyrocketed out of the gate during trading and it never
looked back, closing 260 points higher. Low US retail sales for February means the highly-anticipated Federal Reserve interest rate hike may be
further away than previously thought.
Banking shares themselves had themselves quite a day after almost all of them were given a clean bill of health from the Fed. The dollar,
meanwhile, snapped its winning streak and weakened against the euro, crawling back from 12-year highs.
Intel shares took a tumble. We'll have more on that a little bit later in the program.
With me now is Alan Valdes. He is director of floor trading at DME Securities. Alan, you walk in the morning, you have no idea --
ALAN VALDES, DIRECTOR OF FLOOR TRADING, DME SECURITIES: None.
LAKE: -- what is going to happen. What --
VALDES: No idea.
LAKE: Is this about the Fed? Do you think that that makes sense?
VALDES: Yes. At the end of the day, it's all about that rate hike the Feds were threatening to give us later on earlier in the spring. But
now it looks like with the dollar cooling off a little here, unemployment iffy, consumer spending down for a third month in a row that maybe they'll
hold off and give us a little more no interest rates here. Keeps the market going. Keeps juice in that market.
LAKE: It does. But it's such a big move we saw. If the rate -- we were talking about this earlier this week -- if they raise interest rates,
maybe they're going to do it by a quarter. They're at zero. Is it something that the market is that afraid of that every time it looks like
they're going to hold off, we get this huge rally? Is it rally that much of a bad news, slightly higher rates?
VALDES: It really -- no. If they were to raise it slightly, it really wouldn't have a long-term effect. Initially, there'll be a knee-
jerk reaction, but it'll settle down again.
But we're also looking at that dollar. It did get a little weaker, which is good. But you look at Europe, our biggest trading partner,
they're having problems over there. That weighs on our multinational. The euro popped out of their 12-year low --
LAKE: Yes.
VALDES: -- and raised a little. So, their price has gone up. So there's a whole -- it's just not the Fed, but the Fed was the driving force
today, no question about it.
LAKE: We have a chart of what the Dow is doing this week, and it seems like after a relative period of calm, we're back to that sort of
whipsaw action.
VALDES: Yes.
LAKE: You see these big moves. And I've had people say to me, has that much changed, 250 points worth of it? And then we'll be down the next
day 300 points. What does that tell us about what's going on underneath the market? Because I know you guys see some things that we don't at home.
VALDES: Well, a lot of times, like today, even though we had that huge up gain, over 250 points, the volume's light. So, they're moving --
sometimes you'll see -- not today, but sometimes you'll see the market's up 80 points, it'll be three Dow stocks that are pushing it.
So, a lot of times with light volume -- we'd like to see heavy volume. But with light volume, it can move the market anywhere it wants on certain
stocks. And the problem is, last year, 2014, for every dollar that the public invested, company buybacks were $7. So, that can really move a
stock. So, you have to look into that. Like last month, we had a great month. It was from the company buybacks.
LAKE: I think that's why a lot of people don't trust this bull market that's six years old that we've been applauding. I saw two things you and
I have talked many times about, a lot of short-term people in the market, some of those long-term participants.
Those hedge fund managers, people those investors with longer perspective haven't really been in as much in the broader market.
I also saw a story millennials don't trust the stock market, don't want to put their money there. They're completely scarred psychologically
from what happened in the Great Recession. We had that on CNN Money this week. Should we be worried about that? Is that a market that looks
healthy to you?
VALDES: It's very choppy. I am concerned, I'm watching it closely. But you mentioned the public. But also corporations. Corporations are
holding the most in cash ever. So, they're holding a lot -- and this is non-financial, so this is regular big corporations. And they're in cash
more than they are in the market. So, they're holding a lot in cash right now.
So, people are watching this very closely. And remember, because of volume this light, these markets can, like we saw, whipsaw at any given
day, and no one knows which way they're going to go.
LAKE: That's right. I guess that it's worrying that they're so cautious, but the good news is a lot of people have a lot of powder dry.
If they decide to get a little bit more confident, we could see that really result in some nice-looking action on top of it.
VALDES: We could. And even though the numbers out of Washington are back and forth, the labor force is getting a little stronger. Even though
consumers aren't spending, they're saving more money, they're making more. So overall, I think you're going to see the economy do a little better this
year.
LAKE: We're going to end on that positive note.
VALDES: OK.
LAKE: I'm afraid to take it any further.
(LAUGHTER)
LAKE: Alan, always great to see you. Thank you so much.
VALDES: Thanks, Maggie.
LAKE: Alan Valdes for us.
Well, shares of Intel fell sharply on Thursday, losing more than 4.5 percent. They were the one outlier. The chip maker has cut its revenue
forecast for the first quarter by $1 billion. Now, Intel says companies aren't upgrading their desktops as quickly as expected. PC sales rose last
year after Microsoft ended support for its Windows XP operating system, but that spike has been short-lived.
After the close, Intel -- you can see what happened there just to the stocks. Hewlett-Packard managed to edge up, but not so for the rest of the
other two biggies in that area. Now, Microsoft shares ended down more than 2 percent.
What does this all mean as we move forward? A lot of people talking about the death of the PC. Once again, our business correspondent Samuel
Burke joins us now. Samuel, this has always been the worry we talked about, but a lot of people started to worry -- sort of rethink that thesis
last year when we saw those PC sales rise. What is this telling us?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: That's right. During 2014, there was a period all of a sudden where people were updating again. I
spoke with the CEO of Intel at the Consumer Electronic Show in January and he sounded very optimistic.
Now, we've just had numbers in from IDC that came out just a few minutes ago showing that the PC market is expected to drop about 4.9
percent. Looking here, Maggie, you would say, well, it's very simple to know why these old computers are dying. First the laptops went out after
them, then it was the tablets, and then it was phones. So, there's a lot of competition.
But there's actually a more interesting picture that's happening here, because what Intel is saying is what's driving their stock, their sales
down, is a lack of businesses updating their computers.
And really what this is is actually these companies are a victim of their own success, Maggie. Because people need to update the phones,
because you get new features, or it's too slow, there's not enough space.
But actually, computers are very good now. You don't really need that much more space on a computer. You don't need a computer to go faster. So
people aren't updating as often.
LAKE: And that is trouble. If you're looking at that being your cash cow, that turnover, if you can hang on to them. And I'm going to be honest
with you. I have a computer at home. It's ten years old. I actually finally need to get a new one, but I used to buy them much more --
BURKE: Ten years? That's a --
LAKE: Yes, that's a --
BURKE: -- that's a long time.
LAKE: To one of these kind of companies. And one of the reasons, as you said, because we're buying -- it's all about mobile and what's on the
mobile phones. I want to talk also about news today, Snapchat -- continues to be the sort of hot property everybody wants a piece of.
BURKE: Every -- they're just bringing in that money, Maggie. Amazing. Alibaba has invested $200 million in Alibaba (sic). That gives
them a $15 million valuation, according to various business journals. That's absolutely incredible.
So, this says a lot about both of these companies. One, it says a lot about Snapchat, that they're able to get Alibaba, which just a few months
ago, they were having conversations and nothing came out of that. Now, since then, Snapchat has actually started making money.
LAKE: Oh!
BURKE: And then --
LAKE: Shocking as that is!
BURKE: We don't get to talk about that too often with a lot of these startup apps. So, no, they're not profitable yet, but they're starting to
make money selling ads. Companies like Samsung and Universal Pictures have put ads on Snapchat. And so now, Alibaba is investing.
This also says a lot about Alibaba, because they haven't had a very big footprint out of China, or even Asia for that matter. So, they're
trying to spread their wings, come here to the United States, get in on some action here. And they're trying to do it via messaging apps.
Don't forget, companies like Tencent in Asia already have WeChat, which is very successful. So now, Alibaba is trying to get a piece of the
Snapchat messaging pie.
LAKE: Yes, the messaging. I guess that's where the eyeballs are, so everyone wanting a property like that in their portfolio. All right,
Samuel, it's certainly one to watch. Thanks so much. Samuel Burke for us.
Well, the weak retail sales numbers in the US pushed European stocks down. Shares ended mostly in the red Thursday after a volatile day of
trading. New figures show industrial output in the eurozone fell in January. And in Athens, stocks dropped 0.4 percent.
Prime Minister Alexis Tsipras insisted the government would meet its obligations even if it does not receive the next tranche of bailout money.
(BEGIN VIDEO CLIP)
ALEXIS TSIPRAS, PRIME MINISTER OF GREECE: For Greece, they're off austerity. The memorandum, the Troika is over because this was the
decision of the people in the last elections.
Ladies and Gentlemen, it's absolutely vital that for Greece to have its public debts restructured. That would make the country solvent,
lowering dramatically the yields of the ten-year government bonds, and making it possible for us once again to meet our financial needs in the
capital markets.
(END VIDEO CLIP)
LAKE: The Greek PM was speaking at a meeting with the OECD in Paris.
Tragedy in Bangladesh. Several workers have been killed after a roof collapsed at a cement factory.
(COMMERCIAL BREAK)
LAKE: Local officials tell CNN a roof collapse at a cement factory in Bangladesh has claimed the lives of at least four people. More than 40
have been injured, and dozens more are believed to be trapped.
The collapse took place in the port city of Mongla, southwest of the capital, Dhaka. Victims were rushed to a local medical facility for
treatment. Officials say the factory is owned by an army welfare organization.
Bangladesh has a history of fatal disasters at factories. Many of the recent incidents have been in the garment industry. A fire in a garment
factory outside Dhaka killed 10 people back in October 2013. A few months earlier, in April, more than 1100 workers died in the tragic Rana Plaza
collapse. Five garment factories were housed in the nine-story building.
Back in November of 2012, a fire at another clothing factory claimed 117 lives. Many victims were burned so badly it took DNA tests to identify
them.
As a result of the tragedies, the government revamped laws to make it easier for workers to form trade unions. It also boosted the minimum wage
from about $38 to $68 per month.
Sharon Burrow is the general secretary of the International Trade Union Confederation, and she joins me now. Sharon, thank you so much for
being with us. It seems despite all of the attention and the concern in this list of tragedies we went through, we are still seeing problems in
terms of worker safety.
SHARON BURROW, GENERAL SECRETARY, INTERNATIONAL TRADE UNION CONFEDERATION (via telephone): Well, Bangladesh is a disaster. First of
all, the building fire and safety regulations are nowhere up to scratch. And the labor inspectorate clearly isn't adequate or capable of doing the
job.
We've got now another 40 to 60 fatalities. We're looking for another 50 people to be found trapped in the building. This could add up overnight
to just a tragedy that again sends families into despair in a country where the government just doesn't care.
The laws were updated, but you know, it's been nearly two years, and they haven't put the regulations and the rules in place that would make
them actually operational. And even then, they don't cover all workers, and they're not up to ILO standards. We've still got 400,000 predominantly
women in the APZ, the free-trade zones, with no labor rights.
So, it is not terrific at all. And the companies internationally actually still owe around $9 million to close out the Rana Plaza
compensation fund, and we're coming up to two years in anniversary.
It's a tale of woe, and unless the government is serious about its own people, and those international governments start to put the rule of law in
place for their own multinationals, we'll see more of this.
LAKE: Sharon, even when you have the rule of law in place, you need inspections. You need constant supervision, especially as you make that
initial transition. We mentioned before the role of labor unions. How do you believe that that can actually make a difference or help?
BURROW: Well, you've got two challenges here. The first is, there are more labor unions in the textile sector, but there are still unions
that the government refuses to register.
We've still got employers actually firing, dismissing even being violent in terms of beating up union officials in factories. And there's
no redress for this. So, there's impunity for an enormous number of employers who still don't want to follow fundamental rights for workers.
What we see is a country that's based largely on a model of exploitation of its own citizens, but it also willingly allows
international companies to base their supply chain model on that exploitation, low wages, unsafe factories, conditions that don't measure up
to anything, neither rights that ILO standards decree.
And so, we know that unless governments internationally act, unless they start to build the kind of sustainability pacts that the EU
governments built, the union model of the accord which the European Union textile companies have actually engaged in with unions.
Unlike the American model of the alliance, which has nothing to do with the international unions of industrial and, indeed, union networks
international.
So, we know that there are solutions, but it requires the rule of law domestically. That means a government who will act. And unless the US and
Europe pressure this government with trade -- withdrawing some of their (inaudible) official trade agreements --
LAKE: Right.
BURROW: -- we're not going to see them move. And of course, there's a further step, and the G7 has this on their agenda. We could see
legislation which would require -- the sort of legislation that's in the parliament at the moment in France -- require multinationals to do due
diligence.
LAKE: Right.
BURROW: So that they can set standards.
LAKE: Sharon Burrow joining us from the International Trade Union. Thank you so much. And of course, as we watch those dramatic pictures, CNN
will stay across the search and rescue operation and bring you any news as we have it.
Well, small shifts in China's economy can make a big difference globally. Industrial production has slowed at its sharpest rate since the
global financial crisis. In the first two months of this year, production grew at 6.8 percent compared to the same period last year. That's down
from a 7.9 percent increase in December. This number is meaningful because it's seen as a barometer for broader growth.
The slowdown is not good news for China's migrant workers who have moved to the country's big cities looking for jobs. Many have made
sacrifices, sometimes huge ones, including leaving their children behind while they search for work. David McKenzie has more on this disturbing
trend and the impact it's having on a generation of kids.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Six- year-olds are often hard to handle. But Lu Yiming is perhaps more of a handful than most. And wherever Lu goes, his granny has to follow.
TANG XINYING, LU'S GRANDMOTHER (through translator): I have a lot of trouble with him. He's so difficult. Raising this child is a huge
headache.
(WOMAN YELLING)
MCKENZIE: She takes care of Lu because his father left to find work and his mother abandoned him.
TANG (through translator): I can't teach him well. This boy should be educated by his father and mother. I can't even catch him when he runs
away from me. I can't discipline him when he misbehaves.
(CHILD CRYING)
MCKENZIE: In China, a generation of children like Lu are raised without parents. The numbers are staggering. There are more than 60
million left-behind children in China. That's one in five. More often than not, they're cared for by aging grandparents.
MCKENZIE (on camera): When you visit these villages, you see something extraordinary. It's only the very old here, and the very, very
young. All those who are working have left for the big cities.
MCKENZIE (voice-over): Rural villages like this one in Anhui province are almost empty, the surrounding fields polluted, jobs non-existent.
Recent studies show that left-behind children do worse at school, have behavioral problems as they grow up, and are prone to depression. The
Communist Party says it's trying to help, but many say their policies made it worse.
TANG (through translator): It's not good, but we don't have a choice. I don't want to, but I have to raise him. What other options do I have?
Where would I leave this boy if I didn't take care of him?
MCKENZIE: In the race to build a modern China, China's oldest generation and its very youngest are left behind.
David McKenzie, Chao Hu Village, China.
(END VIDEOTAPE)
LAKE: A different kind of aerospace company is working on an ambitious plan. Planet Labs is gearing up to launch a fleet of pint-sized
satellites to take a daily snapshot of the Earth. We'll show you, next.
(COMMERCIAL BREAK)
LAKE: Here are some stunning new images from NASA. These pictures show a massive cloud of Sahara desert dust blowing across the Atlantic
ocean to South America's rain forest. It's the first time satellites have been able to track how much of the dust moves between continents.
One California company is working to bring that kind of imaging power within the reach of more scientists and businesses. Nick Glass has more.
(BEGIN VIDEOTAPE)
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Earth as seen from the surface of the moon. Move in closer, and it still looks much
the same. What you don't see from either distance is that our planet is constantly changing. We haven't kept a close satellite eye on all this.
GLASS (on camera): Well, that's about to change. There's a company here in San Francisco with an ambition that's out of this world: to map
the Earth like it's never been mapped before.
CHRIS BOSHUIZEN, PLANET LABS: We've invented a miniaturized satellite that allows us to build the world's biggest constellation of Earth imaging
satellites.
GLASS (voice-over): Chris Boshuizen is a physicist who's always been fascinated by space. After developing several satellites for NASA, he set
up a company with two friends on Christmas Day 2010. Their first satellite was carefully named.
BOSHUIZEN: Our satellites are called Doves. Most military satellites have kind of evil names, like Kestrel-Eye and Talon and Raptor. And so,
instead of launching a constellation of satellites, we're launching a flock of Doves.
This is an actual one-to-one scale model of our satellite. This usually pops out of a pod, the wings fall down here on the side, and these
wings are our solar panels that we use for collecting solar power and recharging our batteries.
This is a high-resolution industrial camera, scientific grade camera that we use for collecting the images. So that's essentially -- you can
view it kind of like a glorified webcam in a box with a computer and some radios.
GLASS: The satellites are all developed here by a young and enthusiastic team. Under the red plastic sheets, satellite parts that were
for their eyes only. But in the cover, we were able to see, perhaps, the most important part of any space operation: mission control.
BOSHUIZEN: So, we have currently 20 satellites in orbit. You can see them here in their orbits, which they were placed by their rocket.
Satellites come out from behind the shadow of the Earth, and when they're in sunlight, they take pictures of the ground continuously.
Once they have enough pictures, they pass over one of our ground stations, and what we get looks like this.
GLASS: Vast, evolving landscapes. A tapestry of changing micro climates, ecosystems, and land use.
BOSHUIZEN: We currently have a large number of customers in agriculture, mining and resources, energy, as well as finance. So, being
able to see the planet changing and how people are undertaking their economic activity, where they're investing, and what they're doing, has
tremendous value.
GLASS: It hasn't always been a smooth ride. They lost some 26 Doves in a rocket explosion in October last year, just second after liftoff.
Despite this setback, they hope to have a constellation of 100 or so satellites by 2016.
They have a mission, one they've had since setting up the company: to help safeguard our fragile planet.
BOSHUIZEN: We treat the world as infinite in size, and we don't really care where are the ways to eat or energy or waste products go.
Someone else's problem. We can see the daily impact of what I'm doing, and I can respond to change and say, hey, I really shouldn't have done that. I
think we can do a much better job as stewards of this planet and give everyone a better life.
(END VIDEOTAPE)
LAKE: You can find out more about all of the stories in this series on our website, that's cnn.com/makecreateinnovate.
As Iraq finds itself locked in a costly war with ISIS, it's also facing a cash crunch. We'll hear how the fall in the price of oil is
hurting Iraq's efforts against the militant group.
(COMMERCIAL BREAK)
LAKE: Hello, I'm Maggie Lake. There's more QUEST MEANS BUSINESS in a moment, when we look at how the price of oil could impact Iraq's ability to
fight ISIS.
And new word: palcohol. Why powdered alcohol is causing a bit of a stir.
Before that, this is CNN, and on this network, the news always comes first.
Police say a, quote, "tactical situation" going on at a home in Ferguson, Missouri, is now over. No one has been arrested, but three
people were removed and are now being questioned over the shooting of two police officers Wednesday night. The two wounded officers have been
released from the hospital. CNN's Sara Sidner has more on how the violence unfolded.
(BEGIN VIDEOTAPE)
(GUNSHOTS)
(SCREAMING)
(GUNSHOTS)
SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT (voice-over): Breaking overnight: two police officers in St. Louis County shot outside the
Ferguson Police Department. A night of protest in Ferguson winding down when shots rang out.
UNIDENTIFIED FEMALE: Acknowledgment nine months ago would've kept that from happening.
SIDNER: Witnesses report hearing multiple shots and seeing one officer down.
BRADLEY RAYFORD, WITNESS: Bullets were really right past my head. It was kind of traumatic to -- I'm still kind of in shock because of it.
SIDNER: The injuries are serious. One St. Louis County officer was shot in the shoulder. Another officer, a Webster Groves officer, shot in
the face.
JOE BELMAR, CHIEF, ST. LOUIS COUNTY POLICE: These police officers were standing there, and they were shot. Just because they were police
officers.
SIDNER: Earlier, police drew their guns during a scuffle between protesters, police making multiple arrests.
(SHOUTING)
SIDNER: Some protesters cheered at the resignation of police chief Tom Jackson. For others, it comes too little, too late, demanding the
entire Ferguson Police Department be disbanded.
JAMES KNOWLES, MAYOR OF FERGUSON: The chief's resignation is effective March 19th, 2015.
SIDNER: His resignation comes on the heels of a scathing report from the Justice Department slamming Ferguson officials for widespread racial
bias and targeting African-Americans. Jackson, now one of the six city officials gone after the DOJ's damning report. Some are calling for Mayor
Knowles to be next. He says he won't budge. For now, a nationwide search for a new chief of police is underway.
(END VIDEOTAPE)
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL, FILLING IN FOR RICHARD QUEST: A man has been arrested for allegedly
helping three British girls cross into Syria to join ISIS. Turkey says the man worked for an intelligence agency of one of the countries which is part
of the coalition against ISIS. An American healthcare worker who tested positive for the Ebola virus in
Sierra Leone is expected to be admitted to a Maryland hospital tomorrow. The patient will be flown back from Africa in isolation aboard a chartered
plane. The World Health Organization reports more than 10,000 people have died from the virus. The majority in Sierra Leone, Guinea and Liberia.
Popular fantasy author Terry Pratchett has died. The 66-year-old was best known for his Discworld novels that sold millions of copies. Pratchett was
diagnosed with Alzheimer's in 2007. His publisher says the much-loved writer died today at home surrounded by his family.
LAKE: Four years to the day after the conflict in Syria began, the U.N. is warning that millions of refugees still face a desperate life of
poverty. The U.N.'s refugee agency estimates more than 3.9 million people have escaped the violence in Syria. These are the main countries which
they have fled to. Turkey now has nearly 1.7 million registered refugees, more than any other country. That kind of influx has placed an enormous
strain on the Turkish government who have now spent more than $4 billion on trying to help those who fled.
With nowhere to go and no prospect of a return, many of the refugees are now forced into a life of poverty. From the early days of this turmoil,
CNN has been there to witness the conflict and the refugee crisis that follows.
(BEGIN VIDEOCLIP)
Male: More than 3,800 Syrians have fled across the border here to Turkey, running for their lives. And what is life here like?
Male: Life is bad here. No water, no food, no home. Instead there is disease. Children get ill.
Female: Crammed together, six families. Their feet caked in mud. Mothers trying to provide their children what comfort they can.
Male: This was the town's main hospital. It was hit locals say by war planes on December 31st - one of several civilian targets to be pounded
by airstrikes in just the last couple of weeks.
Female: So we're just right now on the very edge of this makeshift camp and you can see these crude tents that people have strung up for
shelter. It's just sort of terrain now. It's just a plastic tarp.
Male: There are around 7,000 refugees living in freezing tents like this one the edge of Syria waiting to be allowed into Turkey. And there
but a fraction of the hundreds of thousands of refugees living outside Syria as well as many more displaced inside Syria itself.
Male: The monitors are trying to shout out to the soldiers on the other side of the front line there to clear the road, to clear the
barricade. It's clearly a road that's not used often now. The soldiers over there seem to be very nervous.
Male: The shelling and the air raids on the rebel-controlled parts of Aleppo means that any building, anywhere in this part of the city could be
hit at any time. In fact, this building was hit just 20 minutes ago.
Female: They fell in that area. Eleven-year-old Dee (ph) points to where artillery from Syria slammed into the hillside in Northern Lebanon.
Male: You know, there's not many places in the world where you can feel how fierce and intense fighting was if you go there after the fact.
But Baba Amr is certainly one of those places.
Female: That village on the hilltop over there - that is Syria. The actual border is even closer to us. Under normal circumstances, refugees
would never be settled this near to a border, this near to a front line. But they had no other options.
Male: Lebanon has been absorbing refugees for nearly two years now. Winter is setting and fighting's picking up `round Damascus, sending more
people across the border. The country simply can't take anymore.
(END VIDEOCLIP)
LAKE: The Syrian Conflict now in its fifth year. Well crude oil prices ended the day down more than 1 percent. They had spiked earlier in
the day as the dollar weakened. Also contributing to their early rise, intense fighting between ISIS and Iraqi forces in Tikrit.
It's the Iraqi government's biggest offensive yet as it struggles to recapture the ISIS stronghold. Militia leaders aligned with the Iraqi
government say they have retaken control of 75 percent of Tikrit which fell to ISIS last June. Tikrit is one of the key flashpoints in the long and
costly war against ISIS as Iraqi forces struggle to repel ISIS in the north, the fall in oil prices is squeezing the government's finances. By
one estimate, oil revenues are predicted to fall 40 percent this year. So far the war hasn't hurt oil exports. Most of Iraq's oil infrastructure is concentrated in the south, far from ISIS territory. To keep the oil and
cash flowing in, Iraq is renegotiating its contracts with the companies that pump oil. The government has asked oil firms to delay development
projects in an effort to limit payouts. Earlier, I spoke with Ben van Heuvelen. He is the managing editor of the "Iraq Oil Report." I asked him how badly the fall in oil revenue would
hurt the fight against ISIS.
(BEGIN VIDEOCLIP)
BEN VAN HEUVELEN, MANAGING EDITOR, "IRAQ OIL REPORT": It dramatically affects Iraq's revenue. Iraq depends on oil for about 95 percent of
government revenue. So it's a devastating drop for the government. In terms of how that affects its ability to fight ISIS, that's a little bit
more of a complicated picture because fighting ISIS is really the overriding budgetary priority right now. So any money they do have,
they're directing toward the security forces and toward weapons purchases. The problem is that that doesn't leave much left over for anything else,
and so that's really where the country is seeing problems.
LAKE: What are the conditions of the oil production facilities in Iraq? Can they ramp up production enough to at least offset some of that
drop in oil prices?
VAN HEUVELEN: No, part of the problem is that Iraq for years has had inadequate infrastructure connecting oil fields to export terminals. So
it's that middle infrastructure between the fields and where they're loaded onto the ships. And that is years behind schedule and it's still going to
be years before Iraq can take advantage of the production capacity that they've already developed.
LAKE: You just were talking about the fact that this severely depletes their reserves or the revenues coming in hampers their ability to
fight ISIS. The money they do have is going largely to that cause. What happens to all of the rest of the challenges facing them? We know this is
a country that desperately needs to rebuild their infrastructure. They're trying to form, you know, political cohesion. What sort of impact does
that loss of revenue have?
VAN HEUVELEN: Well one of the big problems is that the loss in revenue hampers Iraq's ability to build out the infrastructure that could
allow them to increase oil production which would then give them more revenue. So it basically means they have to spend entirely on their short-
term needs and they have no ability to look ahead or increase their capacity.
LAKE: That must stand in the way of bringing people into the political process as well.
VAN HEUVELEN: Right. Well one of the big problems is that the ISIS crisis has its roots in the political dysfunction in Iraq. And
historically the way that Iraqis have resolved their political problems is by creating consensus through distributing the largess of the state.
And when the amount of revenue coming in shrinks, there's less to give everybody in terms of political favors. So it's much, much harder to
create political reconciliation.
LAKE: Which is going to be a serious issue. Ben, what are their options? Are they going to have to turn to help from the international
community?
VAN HEUVELEN: They already have in a lot of ways. They have asked the United States to delay invoices on weapon sales, they have asked Kuwait
to pause their collection of recreations payments dating back to 1991. They have outlined in their budget an extensive program of borrowing and
worryingly, they have outlined a plan to draw down the foreign currency reserves to support government spending.
(END VIDEOCLIP)
LAKE: In a moment, one U.S. senator calls it an obviously dangerous product. Meet the new alcoholic drink in powdered form.
(COMMERCIAL BREAK)
LAKE: There is a newly legal way to turn water into wine in the United States - well, water into liquor to be exact. Powdered alcohol has
been given the go-ahead by the federal government, and at least one company plans to have it ready for markets this summer.
The decision to legalize powdered alcohol is not without its critics. U.S. Senator from New York Chuck Schumer immediately introduced legislation
against it saying, quote, "I am in total disbelief that our fed4eral government has approved such an obviously dangerous product. Congress must
take matters into its own hands and make powdered alcohol illegal." Mark Phillips is the creator of Palcohol, or powdered alcohol. He joins us
now from Scottsdale, Arizona. Mark, thank you so much for being with us. First of all, I want to first talk about the product before we talk about
the criticism. I have to tell you, when you look at it, it's not that appetizing. Why do we need this? What's the market for this?
MARK PHILLIPS, CREATOR OF PALCOHOL: Well when I first created it, my idea was just for outdoor enthusiasts like myself who want to go out and
backpack camp, bike ride, kayak where weight is an issue and I want to enjoy a drink after I finish my activity. But since it became known to the
public back in April when it was first approved, I've been inundated with all kinds of other uses for it.
As in energy and medicine and manufacturing and commercial use. So there's a myriad of number of ways you can use it. So many more and I think it can
be more of those as the public becomes aware of the product.
LAKE: And, Mark, you probably can't see me, I'm holding up our version of it. Of course it's not on the market yet, but -
PHILLIPS: OK.
LAKE: -- we're guessing this is what it's going to look like. So let's talk about concerns. First of all, are you surprised at the response
and what do you make of the criticism? And it really seems to be concerns focused on minors - that minors are going to see this children and want to
snort it or ingest it somehow, not really understanding what it is?
PHILLIPS: Well, I understand. I'm not surprised by that. A lot of people are concerned about alcohol. I'm concerned about the misuse and
abuse of liquid alcohol - everyone is. And so I'm not going to sit here and say that my product will not be misused or abused by people because it
might be. But you don't ban a product for that. There are so many positive uses of Palcohol and powdered alcohol. You
don't see any bans have been introduced to ban liquid alcohol because we know that prohibition doesn't work. It never - it failed miserably. And
what it did - one of the main reasons about prohibition is it created a black market.
And when you have a black market, then the state loses all control over distribution and that's when underage kids can get ahold of it a lot
easier. So that's why the federal government after Prohibition says let's regulate this to keep it out of the hands of minors. And so that's what
powdered alcohol should be done with - is legalized and taxed.
LAKE: And taxed and regulated. It sounds like if Congress has its way, they probably are going to put some restriction on it. OK, that's the
political hurdle. Let's talk about the business hurdle. I've got to think if you're a liquor executive sitting somewhere - a spirits executive from
one of these giant conglomerates - you're either not happy about this or you're thinking about making an offer for your company and your product.
What do you think the response is? Have you heard from them or had any feedback?
PHILLIPS: Have them call me.
LAKE: (LAUGHTER).
PHILLIPS: But, no, the - so far the liquor industry generally has come out against it. And it would seem obvious because they're trying to
protect their market share and their profits.
LAKE: All right, Mark, fascinating stuff. Let us know how the sales go in the summer and come back on the program. Mark Phillips for us.
Thanks so much.
PHILLIPS: OK, thanks. Thanks very much .
LAKE: The force is definitely strong with Disney shares jumped to light speed after its earnings call. We'll tell you why after the break.
(COMMERCIAL BREAK)
LAKE: "Downton Abbey" got a boost today as Britain's Duchess of Cambridge visited the set. The series is one of the U.K.'s biggest
cultural exports, depicting life above and below stairs in post-Edwardian British mansion. Nina dos Santos has more.
(BEGIN VIDEOCLIP)
NINA DOS SANTOS, NEWS ANCHOR AND CORRESPONDENT BASED IN LONDON FOR CNN INTERNATIONAL: Though she may have left Prince George at home, the Duchess
of Cambridge came face to face with another famous George - four-year-old Zack Barker who plays Lady Mary's son of that name in the hit series
"Downton Abbey." The Duchess who's expecting her second child in April, was given a tour of life upstairs and downstairs on both side of the 1920s class divide,
meeting the cast and crew at London's Ealing Studios, one of two locations employed in its filming.
Female: When are you going to London?
Female 2: Tomorrow I think.
DOS SANTOS: Just like Britain's young royals, the period drama's become one of the country's most successful brands abroad.
Male: Will you permit me to open the ball?
DOS SANTOS: And among the U.K.'s biggest TV exports, "Downton Abbey" itself - the winner of three BAFTAs, three Golden Globes and 11 Emmys. The
program is watched by millions worldwide with as many as 160 million tuning in China alone.
The Duchess' visit is also timely as it showcases one of Britain's most vibrant industries - film and television which together generated the $30
million an hour for the economy, accounting for 5.6 percent of the country's workforce.
With the royal couple themselves admitting that they're fans, it's hard to know who was more star struck.
(LAUGHTER AMONGST CAST MEMBERS)
DOS SANTOS: Either way, the U.K.'s ultimate high society drama now has the ultimate royal stamp of approval. Nina dos Santos, CNN London.
(END VIDEOCLIP)
LAKE: If you can't get enough of the British royals, don't miss this. CNN's royal correspondent Max Foster has gained exclusive access to Prince
Charles and the Duchess of Cornwall as they prepare for a tour of the U.S. "CNN Spotlight - Charles and Camilla" airs Friday, 7:30 p.m. London, 8:30
Central European time only on CNN. Now, take a look at this next story.
("STAR WARS" MUSIC PLAYS)
LAKE: Music to our ears. It was a busy, busy day for Disney. The company's stock shot up 4 percent after it announced a new Star Wars movie
and a sequel to the widely-successful children's movie "Frozen." Disney will be extracting more money out of the two proven cash cows - Darth Vader
and Olaf. "Frozen" has earned more than $1.2 billion since its 2013 launch, and according to "Forbes," "Star Wars" has brought in about $4.8
billion over 40 years when adjusted for inflation. Brian Stelter is our senior media correspondent and he joins me now.
Brian, we should have been outfitted with, you know, Life Savers and all the rest. But this is -
BRIAN STELTER, SENIOR MEDIA CORRESPONDENT: Left my Halloween stuff at home.
LAKE: Exactly, but the anticipation for this, all right, I don't know if we're going to have enough energy left by the time the film comes out.
But this is huge, this "Star Wars."
STELTER: It really is. We're going to see one version of "Star Wars" another every year now. We're going to have the episode 7 this December,
then a spinoff will come out this side of December of 2016 and then episode 8 as we found out today will come out in May of 2017. So, you know, this
is a big change from the past. You used to see many years in between these "Star Wars" editions. Now Disney's going to make the most of their $4
billion purchase of Lucas' film. They're going to have these coming out pretty frequently and maybe we will see it buy - you know - `buy with
"Frozen."'
LAKE: Yes.
STELTER: Maybe they can make them - I'm sure these will be billion- dollar movies like "Frozen."
LAKE: Somebody's already doing a math shop of the two of those. Got to go a bit. Just quickly on "Star Wars" - do they run of risk of sort of
fatigue with this sort of close release times and you know all the marketing that's now going to go down (inaudible).
STELTER: Well that's what people are talking about today is whether these are too closely, you know, being scheduled together. Bob Iger when
this Lucas Film Company was bought said it'll be every two to three years. Well, it's looking more like every one year. But, you know, Disney would
say that their shareholders are just maximizing their investment. And it's noteworthy they announced the release date at their big investment
- big shareholder meeting today.
LAKE: That's right.
STELTER: And they know the audience they're going for with "Star Wars."
LAKE: That's absolutely right. Now "Frozen." I know some people aren't singing, "Let it Go," -- they're saying, "Say it Ain't So" -
STELTER: (LAUGHTER).
LAKE: We got a lot of haters of this film out there, but they're not going to be investors. They love this - this thing is juggernaut that
shows no signs of tiring either.
STELTER: Yes, this was the biggest- you know - the biggest, you know, non-surprise I've seen in media in a long time. We knew there was going to
be a sequel to "Frozen," but now we know it's official, it's in development, it's got the same director and some of the same producers as
the first one. Also some of the same stars like Kristen Bell and Josh Gad are onboard,
they'll be some of the voices for the movie. You know, this is part of Disney creating the whole world of "Frozen."
They've got a theme park edition coming at Epcot with "Frozen," they've got a Broadway show. They've all of these different extensions of "Frozen,"
but the movie will be the most important one. I guess we'll see a "Frozen 2" and then I'm sure "Frozen 3" -
LAKE: (LAUGHTER).
STELTER: -- and so on and so on as the years go on.
LAKE: You know, I saw -- the greatest tweet I saw today was from someone from "Biz Insider" who said Frozen is Disney's iPhone. But they're
kind of not exaggerating, right? I mean, this thing -
STELTER: A good analogy actually.
LAKE: -- it - and it surprised everyone, didn't it? It also shows the power of animation and looping in the family which is I guess why both
of these franchises are such a good fit for Disney, aren't they?
STELTER: Yes, I mean this was Bob Iger's dream come true to have "Frozen" perform as well as it did in 2013 and then keep making money all
throughout 2014. He said last year it was in Disney's top five franchises. I would say at this point it's probably in the top three and we're going to
just keep seeing it growing as time goes on.
LAKE: And all of this comes despite the fact that there's been some concern about box office. You know, whether -
STELTER: Right.
LAKE: -- all of the different outlets eat away at what we're seeing. I guess these kind of franchises are a little bit immune from that
conversation?
STELTER: And they definitely are. The fact that we already know we can circle the day on the calendar - May 26, 2017 for "Star Wars Episode 8"
- you know, that goes to show the power of a ten-poll movie.
LAKE: Yes.
STELTER: That is the kind of movie that is only going to be in theaters no matter how much Netflix and Amazon and other companies do their
best to shrink the time between movies in theaters and movies online. Movies like "Star Wars" are always going to premier in - well I shouldn't
say always - but for our foreseeable future, premier in theaters first.
LAKE: They're event.
STELTER: Yes.
LAKE: They're as close as you get to a live event with all that kind of enthusiasm. Just quickly, Brian, do we - is that sort of shrink that we
can see in a pipeline for movies going to help Disney buffer any weaknesses or issues elsewhere? You and I talk all the time about the threat of TV,
of traditional television and the very quickly-changing landscape there. Does this give them a nice buffer in case there are some issues and hiccups
on that side?
STELTER: Yes, you know their prime time line up on ABC is performing better this season but television is bumpy. You know, television by virtue
is bumpy. You're up or you're down and you're up and you're down. The fact that we can look more than two years out onto the horizon and know
these movies are coming - particularly with "Star Wars." That certainly makes investors feel better.
By the way, they didn't announce a date for "Frozen 2." Maybe that'll be the next big surprise.
LAKE: That's right.
STELTER: I mean, they're able to dribble out every detail about these giant franchises and surprise people with it.
LAKE: That's right. And I think - weirdly my family a little bit immune from "Frozen," -
STELTER: (Inaudible).
LAKE: -- but I have a feeling there's going to be in the next generation of "Star Wars." I have a seven-year-old and he's not really
aware of it yet, and I think that's exactly what Disney's looking for - to catch the next generation - that little bit too young maybe to remember.
STELTER: Yes, and not only with the newest episodes but also with the spinoff you know they're going to create as well. So they're going to
create additional worlds to exploit with "Star Wars."
LAKE: There will be no escape from either. Brian, thanks so much.
STELTER: Thanks.
LAKE: "Quest Means Business" will be back in a moment.
(COMMERCIAL BREAK)
LAKE: The world's largest watchmaker has unveiled its answer to the Apple watch. Swatch revealed a Swatch Touch on Thursday. It will include
a pair of cheap programmable chips that will allow users to set up their watch just the way they want it. Consumers will be able to make payments,
check into a hotel or even track the number of calories lost after a workout.
You'll be able to pair your watch with a smartphone using the provided Blue Tooth connection but Swatch CEO Nick Hayek says he doesn't want to sell you
a phone for your wrist.
(BEGIN VIDEOCLIP)
NICK HAYEK, SWATCH CEO: I always said it was an opportunity for us, but we are not a consumer electronics company. We are not going to
transform and put the mobile phone on the wrist. Let do it - the others. Samsung did it, Sony did it, everybody does it.
(END VIDEOCLIP)
LAKE: Swatch shares were up more than 2 percent after the announcement. Swatch expects to start selling the Touch within two months
at around $135. In the U.S., stocks logged their biggest gains in a month. Weak U.S.
retail sales in February gave investors hope that the Fed will delay raising interest rates. Banking shares rose sharply after almost all of
them were given a clean bill of health from the Fed. The dollar meanwhile snapped its winning streak and weakens against the euro crawling back from
12-year highs. Retail numbers in the U.S. pushed European stocks down. Shares ended
mostly in the red on Thursday after a volatile day of trading. New figures show industrial output in the Eurozone fell in January and in Athens stocks
dropped 0.4 percent. And that's "Quest Means Business." I'm Maggie Lake in New York. Thanks
for watching. Stay with CNN.
END
